Microsoft has limited exposure to China, but US lawmakers still raise questions
- Microsoft president Brad Smith said there are reasons to stay in China, although the company has been reducing is engineering team there
American tech giant Microsoft has come under the spotlight amid rising geopolitical tensions between Beijing and Washington, as US lawmakers questioned the company over its ties to the world’s second largest economy.
Brad Smith, Microsoft president since 2015, disclosed that China only accounted for around 1.5 per cent of its global revenue, but said there are reasons for the company to stay even as the size of its mainland-based engineering team has been reduced.
The reasons for Microsoft to continue its China operations were “to protect American information and trade secrets of American companies who are doing business in China” and to “ensure that [it is] always learning from what’s going on in the rest of the world”, Smith said last week during congressional testimony over computer hacks last year that were linked to China.
The hearings, where Smith had to assure lawmakers that US national security was being protected as part of its involvement in China tech development, reflect how growing bilateral tensions are impacting American businesses.
The tensions are “likely to continue for a long time, which will be a tremendously negative backdrop for US tech companies investing in China”, said He Jun, senior researcher at Beijing-based think tank Anbound.
During the testimony, Smith was asked about his promise to “actively participate in the digital transformation of China’s economy”, an indirect quote published by China’s commerce ministry and attributed to Smith during his visit to the country in December. Smith told the hearings that the words were “not [his] statement”.